Answer: Please see explanation column for answer
Explanation:
Recasting the income statement to emphasize contribution margin.
Juicy Beauty Operating Income Statement, June 2017
Units sold 20,000
Revenues $200,000
Variable costs(subtract):
Variable manufacturing costs $110,000
Variable marketing costs $10,000
Total variable costs $120,000
Contribution margin $80,000
Fixed costs
fixed manufacturing costs 40,000
Fixed marketing and administrative costs 20,000
Total fixed cost $60,000
Operating income $20,000
Working for income statement above =
Contribution margin = Revenue -Total variable cost =$200,000- ($110,000 + $10,000) - $80,000
Operating income= Contribution margin - Total fixed cost = $80,000 - $($40,000 +$20,000) -=$20,000
2 The contribution margin percentage and breakeven point in units and revenues for June 2017.
Contribution margin percentage = ,Contribution margin/ Revenue x 100%
= $80,000/ $200,000 x 100= 40 %
Contribution margin per unit = ,Contribution margin/ units sold
80,000 / 20,000= $4 per unit
Break even point units = Total fixed cost/ ,Contribution margin per unit
= $60,000/ $4= 15,000units
Break even revenue=
we first calculate the selling price = Revenue / units sold = $200,000/ 20,000 =$10
Break even revenue=Break even units x per unit sold = $15,000 x $10 = $150,000.
3. Margin of safety = units sold - break even point unit
20,000 - 15,000 =5000 units
4. If the sales is 16,000 and tax is 30% , Net income is
Units sold 16,000
Revenue $160,000
Contribution margin $64,000
Total fixed cost - $60,000
Operation income $4,000
tax at 30 % - $ 1200
Net income $2,800
working
Revenue = units sold x sale per unit = 16,000 x $10 = $160,000
Contribution margin = Revenue x contribution margin percentage = $160,000 x 40% = $64,000
Operation income = contribution margin - fixed costs= $64,000 - $60,000 = $4000
Tax = 30% of 4000 = $1200
Net income = $4000 - $1200 = $2,800
